×

CNBC Exclusive: CNBC Transcript: Barclays CEO Jes Staley Speaks with CNBC’S Wilfred Frost Today

WHEN: Today, Monday, June 4

WHERE: CNBC's "Closing Bell"

The following is the unofficial transcript of a CNBC EXCLUSIVE interview with Barclays CEO Jes Staley and Wilfred Frost today, Monday, June 4th on CNBC's "Closing Bell" (M-F 3PM – 5PM.) The following is a link to video from the interview on CNBC.com: https://www.cnbc.com/video/2018/06/04/barclays-ceo-markets-business.html?play=1.

All references must be sourced to CNBC.

WILFRED FROST: WELCOME BACK TO THE "CLOSING BELL," I'M HERE AT THE TRADING FLOOR IN NEW YORK OF BARCLAYS BANK, AND I'M JOINED NOW, LIVE AND EXCLUSIVE, BY THE CEO OF BARCLAYS JES STALEY. JES, A VERY GOOD AFTERNOON TO YOU. THANKS FOR HAVING ME HERE.

JES STALEY: WILF, IT'S GREAT TO HAVE YOU HERE. AND AGAIN, CONGRATULATIONS ON YOUR COVERAGE OF THE WEDDING. MY WIFE WAS GLUED TO YOU SO—

FROST: YOU'RE TOO KIND. WELL, IT WAS A NICE MARRIAGE BETWEEN AMERICA AND BRITAIN, WHICH AS IS THIS. SO, AGAIN, THANK YOU FOR HAVING ME THIS AFTERNOON. I WANT TO START WITH THE EXTRAORDINARY VOLATILITY WE SAW IN EUROPEAN MARKETS LAST WEEK, LED BY THE POLITICAL FLUCTUATIONS IN ITALY, AND THE MOVES WE SAW THEN IN ITALIAN BONDS OVER JUST A COUPLE DAYS. WAS THAT A SORT OF FORESIGHT INTO WHAT WE MIGHT SEE COMING UP WHEN QE IS REMOVED FROM EUROPE? IS THERE A BIG BUBBLE IN EUROPE – IN BONDS – BECAUSE OF THAT?

STALEY: WELL I THINK IT WAS A GOOD FIRST -- IT WAS A GOOD REMINDER THAT THE MARKETS ARE NOT IMMUNE FROM GEOPOLITICAL RISK, AND THAT WAS CLEARLY TRIGGERED BY A DUE POLITICAL CHANGE. YOU KNOW, ONE OF THE THINGS I THINK WE'VE SEEN RECENTLY, YOU KNOW, GOING BACK TO THE VOLATILITY SPIKES THAT WE SAW AT THE END OF JANUARY / BEGINNING OF FEBRUARY, TO ME, THE MOST LIQUID MARKETS, SO THE MARKETS THAT ARE MAKING THESE SIGNIFICANT STANDARD DEVIATION MOVES. AND SO HAVING A SOVEREIGN CREDIT LIKE ITALY MOVE AS WIDE AS IT DID WAS QUITE A PHENOMENA. -- UNDERSCORES THE RISK THAT WHILE ON ONE LEVEL, THE CAPITAL MARKETS ARE GROWING, UNDERLYING LIQUIDITY TO A CERTAIN EXTENT IS LOWER THAN IT SHOULD BE, SO WE GET A MOVE LIKE WE SAW IN ITALY. I THINK THE HEALTHY THING IS HOW – IS THAT IT HAS RECOVERED, BUT LOOKING FOR THE SPIKES IN MOVES AND PRICES IN RATES IS SOMETHING THAT I THINK ALL MARKET MAKERS AND ALL MARKET PARTICIPANTS HAVE TO BE CONCERNED ABOUT GOING FORWARD, AND, CLEARLY, WE'RE AT A TIME WHEN GEOPOLITICAL RIFF IS NOT GOING TO BE RECEDING.

FROST: IF WE LOOKED AT JUST THE SHARE PRICE MOVES LAST WEEK OF EUROPE'S BANKS, IT WAS A MUCH MORE PRONOUNCED AND VOLATILE SELLOFF FOR THE CONTINENTAL EUROZONE BANKS WHETHER THAT ITALY-RELATED OR STOCK SPECIFIC – SOME ISSUES FOR DEUTSCHE BANK LAST WEEK. DO YOU AS A EUROPEAN BANK BASED IN LONDON SEE THAT AS AN OPPORTUNITY? IS THE CONTINENTAL U.S. BANKING SPACE WEAK AT THE MOMENT AND SOMETHING YOU CAN SEIZE AS AN OPPORTUNITY?

STALEY: WELL, THE WAY I WOULD DESCRIBE IT, I THINK THE MOVE IN THE EUROPEAN BANKS WAS INDICATIVE OF LIQUIDITY CHALLENGE IN THE UNDERLYING DEBT MARKETS. BECAUSE I THINK MOST OF WHAT YOU SAW WERE MARKET MAKERS SELLING EUROPEAN BANKS TO PROTECT THEMSELVES BECAUSE THE SECURITY MARKETS OF ITALIAN SOVEREIGN BONDS WAS TOO ILLIQUID AT THE POINT TO REALLY CORRECT YOUR POSITION. YOU KNOW, WE DID ONE OF THE LARGEST BLOCK TRADES ON THAT DAY IN ITALIAN RATES, AND IT WAS A CHALLENGE BECAUSE THERE WAS A LACK OF LIQUIDITY/ SO THE STOCK MOVEMENT WAS VERY MUCH A BYPRODUCT WAS WHAT WAS GOING ON IN RATES/ PEOPLE COULDN'T HEDGE THEMSELVES IN RATE SO THEY DEFAULTED TO BANK STOCKS. I DON'T THINK IT UNDERSCORED ANY PARTICULAR ISSUE WITH RESPECT TO EUROPEAN BANKS OR NOT.

FROST: OK. THERE'S A STORY TODAY THAT WE'VE SEEN OVER THE WEEKEND THAT UNICREDIT OF ITALY MIGHT BE CONSIDERING A BID TO BUY SOCGEN OF FRANCE. DO YOU THINK CONSLIDATION ACROSS THE BANKING SPACE OF EUROPE IS COMING, WHETHER IT'S THAT PARTICULAR DEAL OR NOT?

STALEY: I THINK IT'S TRUE THAT SCALE, PARTICULARLY IN CONSUMER BANKING, IS AN ASSET, AND SOMETHING THAT IMPROVES THE VALUATION OF THE BANK. AND YOU DO HAVE A VERY DIVIDED MARKET ACROSS THE CONTINENT OF EUROPE IN TRYING TO DEVELOP BANKS THAT HAVE THE SCALE THAT THE U.S. BANKS FOR INSTANCE HAVE IN THIS MARKET -- MAKES SOME SENSE. THAT BEING SAID MERGERS ARE VERY DISRUPTIVE, THEY'RE VERY – THEY CAN COST A LOT OF MONEY TO MAKE THEM WORK. I ALSO THINK YOU HAVE TO BE VERY MINDFUL OF WHERE THE REGULATORS SIT TODAY. TWO SIFI BANKS OR SIGNIFICANTLY IMPORTANT FINANCIAL INSTITUTION, MERGING IS A PARTICULARLY MAJOR CHALLENGE I THINK IN THIS REGULATORY ENVIRONMENT SO LET'S SEE WHETHER IT REALLY UNFOLDS. SCALE ON THE ONE HAND AND I THINK IT'S TOO BIG TO FAIL ON THE OTHER.

FROST: SO THE STORIES OF BARCLAYS LOOKING AT STANDARD CHARTER, ALSO, I GUESS HAVE REGULATORY HURDLES. IS THAT SOMETHING THAT'S REALISTIC?

STALEY: NO. THERE IS NO DISCUSSION GOING ON WITH STANDARD CHARTER. THAT WAS A ONE DAY EVENT IN THE PRESS. WE'VE SPENT A LOT OF TIME IN THE LAST TWO YEARS RESTRUCTURING THIS BANK. WE'RE DONE WITH RESTRUCTURING. WE HAD A TERRIFIC FIRST QUARTER/ SO WE'RE OFF TO THE EXECUTE THE STRATEGY OF BARCLAYS.

FROST: SO WHAT PART OF THE STRATEGY AND YOU MENTIONED HAVING SCALE IS TO BUILD A SORT OF TRANSATLANTIC INVESTMENT BANK? YOU'RE ALSO FACING PRESSURE FROM AN ACTIVIST, EDWARD BRAMSON, WHO YOU'VE PERSONALLY MET WITH. WE HAVE NOT HEARD FROM HIM IN THE PRESS SPECIFICALLY WHAT HE WANTS. DOES HE SUPPORT YOUR DECISION TO PUSH HARD THAT TRANSATLANTIC INVESTMENT BANK?

STALEY: YOU KNOW, WE HAD A VERY GOOD MEETING WITH BRAMSON. WE'VE HAD OTHER CONVERSATIONS WITH HIM. WE TALKED ABOUT OUR STRATEGY. WE TALKED ABOUT THE FIRST QUARTER. HE REALLY HASN'T ROLLED OUT TO US WHAT HIS STRATEGY IS. HE'S TALKED TO HIS SHAREHOLDERS ABOUT HIS THOUGHTS, BUT WE HAVE NOT GOT IT BACK FROM US YET. WE'RE LOOKING FORWARD TO THAT. WE WALKED HIM THROUGH OUR THOUGHTS BEHIND THIS IS TRANSATLANTIC CONSUMER AND WHOLESALE BANK. WE THINK THERE ARE GREAT SYNERGIES ACROSS THE ENTIRE PLATFORM AS WELL AS THE DIVERSIFICATION BENEFIT OF BEING A CONSUMER BANK, A WHOLESALE BANK, BEING A U.K. BASED BANK, BUT ALSO HAVING A SIGNIFICANT PRESENCE IN THE USZ.

FROST: YOUR TRADING PERFORMANCE LAST QUARTER IN TERMS OF YEAR OVER YEAR GROWTH WAS ACTUALLY STRONGER PARTCULARLY IN DOLLAR TERMS THAN SOME OF THE U.S. INVESTMENT BANKS, WE HEARD FROM JPMORGAN LAST WEEK, THEY LOWERED THE GUIDANCE TO SORT OF FLAT OR SINGLE DIGITAL GROWTH YEAR ON YEAR. HOW ARE THINGS SHAPING UP THIS QUARTER?

STALEY: SO IN THE LAST TWO QUARTERS - THE FOURTH QUARTER AND FIRST QUARTER, WE HAVE GAINED MARKET SHARE IN OUR MARKETS BUSINESS. OUR MARKET REVENUES IN DOLLAR TERMS IN THE FIRST QUARTER WAS UP 21% VERSUS THE AMERICAN AVERAGE OF ABOUT 10% VERSUS THE OTHER EUROPEAN BANKS, 0 TO DOWN IN ONE CASE. SO WE GAINED SIGNIFICANT MARKET SHARE IN THE FIRST QUARTER. THAT'S SIT SHARE IN THE FIRST QUARTER. THAT'S VERY HEALTHY FOR US. WE CAN'T COMMENT ON THE SECOND QUARTER, OBVIOUSLY, BUT WE LIKE WHAT WE SAW IN THE FOURTH AND THE FIRST QUARTER. ANOTHER THING WE SAID THAT OUR RETURN ON EQUITY IN THE MARKETS BUSINESS WAS IN DOUBLE DIGITS IN THE FIRST QUARTER, SO NOT ONLY DID WE GAIN MARKET SHARE, BUT IT WAS PROFITABLE FOR US.

FROST: TALKING ABOUT TRANSATLANTIC RELATIONS, WE GOT A RESPONSE FROM THE PRIME MINISTER THERESA MAY ABOUT TRUMP'S RECENT TARIFFS TODAY AND SHE CALLED THEM, "UNJUSTIFIED AND DEEPLY DISAPPOINTING." PRESIDENT TRUMP DUE TO VISIT THE U.K. NEXT MONTH. YOUR TAKE AS AN AMERICAN IN LONDON, HOW DO YOU THINK THAT'S GOING TO GO DOWN?

STALEY: WELL, I THINK ONE OF THE FIRST QUESTIONS IS, IS THIS MOVE BY THE TRUMP ADMINISTRATION TACTICAL OR STRATEGIC? IS THERE A PULLBACK FROM THE GLOBAL SYSTEM OF FREE TRADE OR THE ATTEMPT TO GET TO A FREE TRADE MARKET GLOBALLY OR IS THIS A FIRST STEP IN WHAT WILL BE A LONG NEGOTIATION? THE PARTNERSHIP BETWEEN THE U.K. AND THE UNITED STATES IS HISTORICAL, IT'S VERY, VERY DEEP, I WOULD HOPE THAT THE UNITED STATES AND U.K. CORRESPONDENT TO HAVE A VERY ROBUST AND SOLID RELATIONSHIP, AND I HOPE THAT THE VISIT BY THE U.S. PRESIDENT TO THE PRIME MINISTER OF THE U.K. IS CONSTRUCTIVE AND GOES WELL.

FROST: BUT DO YOU THINK HE MIGHT – ACROSS THE PUBLIC – FROM YOUR READING OF HOW HE'S GOING DOWN HE MIGHT HAVE A TOUGH RECEPTION, MORE BROADLY?

STALEY: YOU KNOW, I THINK, YOU KNOW A MOVE LIKE RAISING THESE TARIFFS HAS OBVIOUSLY GOTTEN A RESPONSE, WHETHER IT'S CANADA, WHETHER IT'S FRANCE, WHETHER IT'S THE UNITED KINGDOM. YOU KNOW, THE UNITED STATES IS FOR SO LONG TAKEN A LEADERSHIP ROLE IN NAVIGATING THE REGULATION OF THE GLOBAL ECONOMY, I THINK THERE'S A REAL CONCERN THAT IF THERE'S A PULLBACK, WHAT THE IMPLICATIONS MIGHT BE, AND I THINK THAT'LL BE A HEARTY DISCUSSION.

FROST: SURE IT WILL INDEED. I WONDER IF THE WEDDING WILL HELP THE RELATIONSHIP. MOVING ON SPECIFICALLY JUST TO YOU, YOU WERE FINED $1 MILLION ROUGHLY BY U.K. REGULATORS AND 3/4 OF #1 MILLIIOJ BY YOUR OWN BOARD FOR TRYING TO ESTABLISH THE IDENTITY OF A WHISTLE-BLOWER INTERNALLY. THAT RAMPED UP FOR QUITE A LONG TIME, ISSUE HANGING OVER YOU AND THE BANK THE QUESTION IS, DURING THAT EXTENDED TIME, HOW MUCH PRESSURE DID YOU FEEL? DID YOU EVER CONSIDER THE WORST THAT YOU WOULD LOSE YOUR JOB?

STALEY: FIRST, I ACCEPT THE CONCLUSION ARRIVED AT BY THE FCA AND PRA AND FULL REPORT OF THE INVESTIGATION, I THINK, IS VERY FAIR, AND BALANCED IN TOTALITY. YOU KNOW, THE LAST YEAR AND A HALF HAS HAD ITS CHALLENGES. WE REDUCED THE HEAD COUNT OF BARCLAYS BY 56,000 PEOPLE. WE SOLD 22 BUSINESSES AROUND THE WORLD. WE CLOSED OUR RETAIL BANKING BUSINESS ACROSS AFRICA AND ACROSS CONTINENTAL EUROPE, ET CETERA. AT THE SAME TIME, WE WERE CHARGED AND SUED BY THE JUSTICE DEPARTMENT OVER MORTGAGE-BACKED SECURITIES SOLD IN 2006 AND 2007. ON TOP OF THAT, WE WERE CHARGED CRIMINALLY BY THE BRITISH GOVERNMENT AROUND A CAPITAL RAISE IN 2008. SO WE HAVE THESE LAWSUITS WITH THE DEPARTMENT OF JUSTICE, WITH THE BRITISH GOVERNMENT, WE HAVE THE RESTRUCTURING, THE REORGANIZATION OF THE BANK, WE HAVE THIS CASE OF THE ANONYMOUS LETTER, AND TO AN EXTENT, ALL OF THAT IS BEHIND US. AND NOW WE CAN LOOK FORWARD TO RUNNING THE BANK AND EXECUTING ON OUR STRATEGY. WE HAD A GREAT FIRST QUARTER, AGAIN, THE GROUP RESULTS, AND EXLITIGATION ISSUES WAS A DOUBLE DIGIT RETURN FOR THE SHAREHOLDERS, SOMETHING NOT DONE IN FOUR YEARS. SO THOSE ISSUES ARE BEHIND AND NOW IT'S TIME TO MOVE FORWARD.

FROST: INDEED. AND A LONG LIST OF ISSUES THAT SUCCESSFULLY HAVE BEEN PUT BEHIND YOU, AS YOU SAY, JES, BUT SPECIFICALLY ON THE INVESTIGATIONS INTO YOU PERSONALLY, IT WAS VERY DRAWN OUT. IT DID TAKE A LONG TIME. THE CONCLUSION, EVENTUALLY, OF COURSE, HAS ALLOWED YOU TO KEEP YOUR JOB, BUT DID YOU FEAR IN THE MIDST OF IT, IT COULD BE WORSE, THE OUTCOME, THAT YOU MIGHT LOSE THE ROLE THAT YOU'RE IN THE AT THE MOMENT?

STALEY: YOU KNOW, I'VE GOT A LOT OF RESPECT FOR THE U.K. REGULATORS. IT WAS A VERY ROBUST INVESTIGATION BY THEM. BARCLAYS IS A VERY COMPLICATED CHALLENGING BANK, BUT, NO, I FELT, YOU KNOW, I FEEL THAT WAS MY OBLIGATION TO COMMIT MY FOCUS AND ATTENTION TO THE BARCLAYS SHAREHOLDERS, THE BARCLAYS' CUSTOMERS AND CLIENTS, AND SO, YOU KNOW, NOW WE MOVE FORWARD.

FROST: I WANTED TO ASK ABOUT THE RELATIONSHIP THAT YOU HAVE, YOU KNOW, FAMOUSLY WITH JAMIE DIMON IN THE STATES, SOMEONE THAT WE ALL KNOW WELL ON THIS CHANNEL. HE PRESENTED AT A BARCLAYS' CONFERENCE LATE LAST YEAR, AND WHEN YOU INTRODUCED HIM, YOU DESCRIBED HIM AS A, QUOTE, "DEEPLY SPECIAL FRIEND," AND QUOTE, "ARGUABLY THE MOST IMPORTANT AND RESPECTED LEADER OF A FINANCIAL INSTITUTION IN OUR GENERATION." I GUESS THE STRENGTH OF THOSE WORDS SURPRISED SOME PEOPLE, GIVEN THAT IT WAS FELT, AT TIMES, THE TWO OF YOU MAY HAVE GONE THROUGH A MORE FROSTY RELATIONSHIP, AND I WONDERED IF YOU COULD TALK US THROUGH THE HIGHS AND LOWS AND HOW YOU ARE PLEASED NOW TO BE BACK IN THE POSITION WHERE IT IS, INDEED, SUCH A POSITIVE RELATIONSHIP.

STALEY: YOU KNOW, AS AN EDUCATION FOR ME, YOU KNOW, NOW AS CEO OF BARCLAYS TO WATCH HOW HE NAVIGATED THE FINANCIAL CRISIS AND HOW HE COMMANDED WHAT JPMORGAN WAS DOING, AND WAS SO INTRICATELY INVOLVED WITH THE REGULATORS AS TO HOW THEY WOULD TREAT IT, IT WAS A REAL LESSON IN LEADERSHIP, AND TO BE ON THE OPERATING COMMITTEE AND VERY CLOSE TO HIS SIDE DURING THAT WAS A GREAT EDUCATION, WAS A GREAT EDUCATION FOR ME. I LEFT THE BANK. NOW I'VE GOT THE OPPORTUNITY TO RUN BARCLAYS. JAMIE AND I TALK QUITE A BIT, ACTUALLY. WE'RE SEEKING MORGAN'S ADVICE AS OUR CORPORATE BROKER AROUND OUR ACTIVISTS – SHERBORNE. AND JAMIE HAS DONE A REMARKABLE JOB FOR THE INDUSTRY. HE'S CHARISMATIC, HE'S THOUGHTFUL, AND HE'S BEEN VERY SUPPORTIVE OF ME, AND THERE HAVE BEEN A NUMBER OF TIMES WHETHER IT WAS THE BREXIT EVENT, WHETHER IT WAS THE SERIOUS FRAUD OFFICE CHARGE, WHERE JAMIE HAS PROACTIVELY CALLED ME UP AND OFFERED ADVICE AND COUNSEL, AND SUPPORT. AND THAT'S SPECIAL FOR A CEO TO DO FOR ONE ANOTHER.

FROST: AND HE'S ALSO RECOMMITTED TO JPMORGAN FOR FIVE YEARS, SO YOU PROBABLY MADE THE RIGHT CHOICE TO SEEK A CEO ROLE YOURSELF ELSEWHERE.

STALEY: I THINK THAT'S TRUE.

FROST: JES, IT'S BEEN A PLEASURE TALKING WITH YOU AS ALWAYS. THANK YOU VERY MUCH FOR HAVING WITH.

STALEY: THANKS, WILF. A REAL PLEASURE.